Increasing Competition Between Low Cost Carriers

Increasing Competition Between Low Cost Carriers
Introduction
With the advancement of technology, traveling around the world is no longer a privilege to wealthy
people. Tony Fernandes, the owner of AirAisa, pointed out that the raising middle class in Asian
countries starts to be able to afford air travel for the first time (Grant, 2013). To the people who
often have budget constraint while traveling such as students and social freshmen, it is more likely
for them to go for short–haul or medium–haul trip rather than the countries with longer flight length
and higher prices. The low–cost carriers (LCC) capacity share boosts significantly in Southeast
Asian countries such as Indonesia, Thailand, Malaysia, Singapore and the Philippines from 3% in
2001 to over 50% in 2012 (CAPA, 2013). ... Show more content on Helpwriting.net ...
But in order to decrease the ticket prices, Scoot charges for the "extra" services. For example,
passengers can only bring a hand carry baggage with a 10 kilograms minimum and have to pay an
additional fee when they have checked–in baggage. Therefore, due to the cost control, the
augmented product such as friendly crew and in–flight entertainment are not necessary. However,
although Scoot is a LCC company, there is still a premium cabin called ScootBiz, which provides
better services with the traditional airlines' quality.
Price is one of Scoot's biggest competitive strengths; it claimed to offer tickets up to 40 percent
cheaper than traditional airlines (CNN, 2011). Since the price sensitivity for LCC customers is much
more higher then the traditional ones, customers, especially students, often do a lot of researches
online comparing the prices between different airlines (Grigolon, Kemperman and Timmermans,
2012). Scoot cut down the operating cost by cooperating with Apple, using iPads to replace the
traditional entertainment system, which weighs more than two tons, to save fuel (Bloomberg, 2012).
As mentioned in the last paragraph, they removed the unnecessary extra service such as the
entertainment; making iPads rentable only for the ones who needed is an effective way to cost down.
While fuel prices keep increasing these years, this
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Air Canada
Air Canada – Risk Management
Case Report
Industry Overview The airline industry is one of the largest global industries in the world. Airline
companies in the airline industry have gone through challenging obstacles in the past decade. Many
changes have occurred within the industry and increased regulations have driven up cost for the
industry. The attacks on 9/11 left the industry in shock when planes were used in terrorist attacks in
the United States. These attacks changed the mentality of the industry and shifted the focus towards
safety. Safety was also a major concern in the industry with the breakout of SARS in 2003 and the
H1N1 flu in 2009. The airlines had to ensure that public health and safety of the travelers were ...
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According to the Bureau of Transportation Statistics, the airline industry experienced losses from
2001 to 2004. In 2005, the industry was profitable for the first time in four years and stayed
profitable through 2007. The economic and financial crisis in 2008 took a toll on the industry,
causing a few airlines to file bankruptcy. The improvement of the economy in 2009 and 2010 helped
the industry get back to profitability. Airlines were using tactics to increase revenues, including
charging baggage fees, charging for food and drinks on board, and some airlines charged additional
fees for seats with more leg–room. The large increases in revenues helped to offset the higher fuel
costs, helping the companies achieve profitability.
Air Canada Air Canada is Canada 's largest full–service airline and the largest provider of scheduled
passenger services in the Canadian market, the Canada–U.S. trans–border market and in the
international market to and from Canada. In 2010, Air Canada improved its reputation as one of the
world's leading international air carriers. Significant progress was made on executing and delivering
on its four key priorities and this, coupled with improving economic conditions, allowed Air Canada
to record operating income of $407 million in 2010, a $677 million improvement from 2009. Air
Canada's financial strategy is to continue to improve both the level and sustainability of its

Southwest Airlines Vs Jetblue Merger
Given the fierce competition in the airlines industry and the additional competition being offered by
the new ultra–low cost carriers, it has become imperative for Southwest Airlines to find a solution
that will be sustainable and insulate them verses these and any other future threats. Southwest has
initiated a merger proposal with JetBlue that will result in the newly formed SouthwestBlue being
much larger and able to compete for control of the North American Continent as the number one
provider for customers concerned with both low–cost and excellent customer service. Because both
Southwest and JetBlue have similar core values, customer service policies, and business models, it
will be an easier merger than it would be for two carriers with drastically different layouts. ... Show
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The merger is expected to take a total of 5 years with an end result of a fleet of nearly one thousand
planes covering more than 150 cities in United States with connecting flights to more than 30
countries around the world. All evidence indicates that a merger between Southwest Airlines and
JetBlue Airlines can be completed within 5 years and will be successful in helping the merged
company become the industry leader in low–cost, high customer service airline carriers in North
America. The minor obstacles such as redundant cities, a balloon payment owed by JetBlue,
redundant Point of Sales Systems and baggage tracking systems, and a surplus of employees, is
negligible and easily resolved during the 5–year merge period. A few decisions will still need to be
made such as what to do about employee contracts being different between the two carriers and
pension plans but the merger is being given a good to very good rating for its chances to succeed as

Financial Issues Faced By Delta Airlines
The case represents the competitive issues faced by a creative, innovative, and a well–established
airline, Delta Airlines Company, which had successfully earned a reputable name in the airline
industry with all its significant efforts. The company started its operations in the year 1928 and with
the help of strong and effective leadership, the company successfully gained access to new routes,
which ultimately resulted in the increased revenues for the company. The industry is filled with the
number of competitors including the low cost carriers as well as the legacy carriers. However, the
company is one of oldest company in the industry, which significantly helps in recovering from the
major challenges occurred in the overall economy. The company over the years had a strong focus
on the customer's satisfaction that helped in the recovery of US Federal Airline Deregulation Act in
1978, which was coupled with recession in early 1980s. Both the issues have negatively affected the
overall industry in form of heavy losses. From the financial analysis, it can be seen that underlying
company in this report with effective management, turned to profitability in 1990s.
The competition in the airline industry is intense due to which Delta constantly faced challenges in
terms of economic downturns, and competition especially from low cost carriers (domestic) rather
than the legacy carriers. One of the alternative solutions available with the company is to launch its
own low–cost

Low Cost Carrier Characteristics
The idea to enter the world of the full cost carriers by low prices isn't a new one. Already in 1977
Laker Airways founded the "Sky Train" between London and New York. Even if this service was
never successful, more and more low cost carriers were founded during the progress of deregulation
and the development of an own low cost strategy began.
When we today have a look at the homepages of low cost carriers we cannot but state that nearly all
of them are operating successful despite the issues of September 11th in 2001, SARS in 2002 and
the war in Iraq in 2003.
Southwest for example has shown a positive net income for the period of 1990 to 2002 (Appendix
A) and is nr. 5 of America's most admired companies in 2005 (Homepage). Also Ryan ... Show more
content on Helpwriting.net ...
Maintenance: As maintenance costs are a typical economy of scale business it is only possible for
full cost carriers to run it cost–effective. Hence low cost carriers mostly outsource their maintenance
(Pompl, 2002). But the low cost carriers make strong efforts to find new maintenance concepts that
are more appropriate for their needs and even more cost efficient e.g. through cheaper labour costs.
As Allan Marking, chief engineer at easyJet says: "I'm not looking for the minimum maintenance
performance, I'm looking for the best value where maintenance is an investment in the reliability
and longevity of the aeroplane" (Pilling, 2004).
Labour costs: " For most airlines wage costs and associated social security and pension payments for
staff represent the largest single cost element" (Doganis, 2002, p.115). Appendix C gives an
overview of the great differences in average annual remuneration. In the low cost business it is
normal to get lower wages by higher duty times for the crews as low cost carriers aim to make the
pilots most productive. "The average Southwest Pilot produced 800 block hours in 2000. In
comparison, the average United Airlines' pilot produced only 54% of the output produced by the
average Southwest pilot" (Gillen & Lall, 2004, p.44). Despite this fact the staff of Southwest is
highly motivated. For instance

Essay On Loyalty And Loyalty
Customer Satisfaction And Loyalty
Zeithaml and Bitner (2000) defined customer satisfaction as the "customers' evaluation of a product
or service in terms of whether that product or service has met their needs and expectations".
Therefore, satisfaction is a consumer's post–purchase evaluation and affective response to the
overall product or service experience. In other words, what consumer perceives after a product or
service consumption determines his/her satisfaction. Many researches have concluded that
satisfaction can determine the customer loyalty. Customer loyalty defined as "a deeply held
commitment to re–buy or re–use a preferred product/service consistently in the future, thereby
causing repetitive same–brand or same brand–set purchasing, despite situational influences and
marketing efforts have the potential to cause switching behavior. The satisfaction/dissatisfaction
occurring through a matching or mismatching of expectations and perceived performance leads to
loyalty behaviour.
Customer satisfaction was the key factor that affects mostly on service loyalty. Oliver suggested that
satisfaction is a pleasant routine and in order to be effective on loyalty, satisfaction should occur for
the ... Show more content on Helpwriting.net ...
According to the date of Air Asia, customer satisfaction is defined as the result of a cognitive and
affective evaluation, where some comparison standard is compared to the actually perceived
performance. If the perceived performance is less than estimated, customers will be dissatisfied. On
the other hand, if the perceived performance exceeds expectations, customers will be satisfied and
delightful. Otherwise, if the perceived expectations are met with performance, customers are in an
unconcerned or neural stage. In general, increased customer satisfaction leads to higher customer
retention rate, increases customer repurchase behaviour, and ultimately drive higher firm

Southwest Airlines : The World 's Largest Low Cost Carrier
Southwest Airlines is the world's largest low–cost carrier and has been in service 43 years.
Southwest originated in Texas in 1971 and was to initially only serve Houston, Dallas, and San
Antonio. In 1989 the airline had grown tremendously by exceeding the billion–dollar revenue mark.
Southwest prides itself in differentiation by delivering exemplary customer service. The superior
customer service is carried out by approximately 46,000 employees to over 100 million flyers
annually. Southwest Airlines operates more than 3,600 flights daily on what is considered the largest
fleet of Boeing aircrafts. People prefer flying with Southwest because of the customer friendly
touches. Southwest offers great service, affordable rates, pet friendly ... Show more content on
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With the application of the new scheduling, many flights were late on both arrival and departure.
Southwest tainted its on–time record drastically; only 71.8 percent of its flights arrived on time. In
comparison, Delta Airlines flew 82.7 percent on–time and Hawaiian Airlines 93.6 percent.
The Transportation Department considers a flight as on time if it arrives within 14 minutes of its
schedule. One reason for the tardiness was due to weather conditions. Winter storms that struck in
December and January can be the blame for the lateness. Other reasons for being delayed include:
security delays, national aviation system delays, air carrier delays, and diversion. Southwest is also
newly adjusting to the use of a larger model aircraft. Southwest usually flies a 143–seat 737s, but the
new 175–seat 737–800 takes longer to load considering it carries more passengers. These factors
contribute to Southwest's poor timing.
There are various stakeholders involved affected by this issue. Shareholders are interested in a return
on investment. The new strategy was intended to increase revenue, which satisfies the need for a
return rate for shareholders. Because the strategy was not as effective as planned, this could have led
to a loss. Southwest has not experienced a loss in consumers, but this could have resulted in a
decrease in revenue. Competitors are also a stakeholder that plays a part in Southwest's issue.

National Airline Market Analysis : The Airline...
National Airline Market Analysis
In response to this foreign competition and domestic pressures the Airline Deregulation Act of 1978
was passed. Deregulation meant the market would be generally free from government controls and
operate under free–market principles. By the early 1980s new carriers flooded the market causing an
initial drop in fare prices. In this new market Airlines such as Pan American and TWA suffer
financially. Many of the large legacy airlines that operated successfully under the guidelines of the
Civil Aeronautics Board initially had trouble adjusting. Within the CAB system there was not
enough incentive to be efficient. As a result, free market competition was a shock to the airline
system. During the 1980s and ... Show more content on Helpwriting.net ...
During this time the estimated total economic output has grown from 1.01 trillion to 1.53 trillion.
Included in these estimates are employment effects, airport activities, and the transport of cargo and
passengers. These metrics are designed to estimate the total impact of the airline industry has on the
economy. While it is important 2 have an understanding of the industry as a whole this analysis will
focus on the domestic passenger market.
The domestic passenger market is a multi–level system consisting of local, regional, and national
carriers. Together this broad market has approximately 100 airlines operating over 11 million flights
per year. Most statistical sources include information from this overall market structure with the vast
majority of the carriers listed in a group as "other." This is because most of these approximately 100
carriers operate in local or regional capacities and have very little impact on the overall market. For
this reason, I will further narrow my analysis to only include those carriers in the national market.
Currently the National Market consists of 17 companies varying in size and structure. There are four
full service firms which control 67% of the market and 13 low–cost carriers making up 20% of the
market. The other 13% is comprised of the local and regional companies excluded from this
analysis. Domestically these

Five Forces Analysis Of The Airline Industry In Europe
Introduction
This is an analysis of the Airline Industry in Europe. The paper will cover the current market
situation, including financials and market volume. Following this will be a Five Forces analysis on
the factors that affect industry competition. The paper will conclude with key insights into the
profitability of the industry and a SWOT analysis of one of the industry's best performers and what
rivals and possible future entrants can learn from their success.
Current Situation
In recent years the Airline Industry in Europe has experienced good levels of growth. Despite
instances of deceleration the market is forecasted to remain stable producing moderate growth
through to the end of the forecast period in 2018. According to a report issued by MarketLine in
2014 the European Airlines industry had total revenues of $180,945.8m in 2013, which represented
a compound annual growth rate ... Show more content on Helpwriting.net ...
The sector employs more than 3 million people. Prior to the 1990's, the air transport industry in
Europe had been traditionally highly regulated and dominated by national carriers and state owned
airports. Since then a single market for aviation has been created. The single market has seen the
removal of all commercial restrictions for airlines flying within Europe. These include restrictions
on routes, number of flights and the setting of prices.
Five Forces Analysis of Industry
This section will examine each of the five competitive forces that are active in the European Airline
Industry. In this instance the buyers in the industry will be taken as passengers. Fuel companies,
aircraft manufacturers and employees are the suppliers. Substitutes stem from modes of transport
that fall under land and sea transit. Potential entrants are any airlines based outside of Europe or
newly founded airlines based in Europe.
The Five Forces:
Degree of rivalry
Buyer bargaining

The Ascendance of Airasia Essay
Case: The ascendance of AirAsia
1. What is the macro and industry environment for new budget airlines in the Asia– Pacific region?
What opportunities and challenges are associated with that environment?
People in the Southeast Asian have low average incomes. The low average incomes should boost the
cheap fares demands. In recent years, because of the government decreased the entry barrier of
airline industry, more and more carriers entered the airline market. The Southeast Asian has very
large populations; these carriers are attracted by the large number of potential travelers. This caused
the Southeast Asian budget traveler increase very quickly. Otherwise, the fuel prices increased very
quickly, and ... Show more content on Helpwriting.net ...
AirAsia's focus on Internet bookings and ticketless travel allowed it to emphasize simplicity for the
customer while securing low distribution costs. The revenue formula of AirAsia mostly followed the
traditional low–fare approach.
Southwest Airlines:
Business–level strategy consists of their cost leadership and differentiation. Southwest Airlines was
the leading pioneer in adopting a budget airline model. They are cost leaders by keeping company
expenses down and providing low prices to the consumers. Their efforts are focused on a limited
market segment such as cost–conscious business travelers. Southwest Airlines focus on the
customer, having more of a "people strategy."
Ryanair Airlines:
Ryanair Business strategy fits the Operational Excellent Model of high reliability and dependability
with fewer flight cancellations, great punctuality and fewer lost bags than most airlines. It operates
on a highly efficient basis too with high aircraft utilization, minimum staffing, and maximize their
use of the Internet to keep booking costs down. Ryanair airlines focus on their operation.
But, these airlines companies also have similar strategies. They all focus on low–fare strategy,
customers and services.
4. Did Fernandes weigh the range of political, economic and operational uncertainties and risks
when he took over AirAsia? What risks might he have overlooked?
Yes, Fernandes weigh the range of political, economic and operational

The Low Cost Carrier Model
Multimedia University
BRM8014 Advanced Marketing
Case Writing
The Low Cost Carrier Model – Air Arabia
Student Name: Abdelbaset Queiri
Student ID: 1111800065
1. Introduction
Amidst the global crisis in the airline industry, figures from the International Air Transport
Association (IATA) report that actual passenger traffic worldwide has increased 5.9% from the
previous year for the period Jan–Sep 2006. Alarmingly, the Middle East has shown the strongest
growth with a remarkable 15.4% for the first nine months of 2006 (Fig. 1). Within the Middle East,
the GCC (Gulf Cooperation Council) region in particular has seen major developments. New
entrants are threatening the existence of long ... Show more content on Helpwriting.net ...
Qatar Airways and Emirates Airline have a clear vision of extending their network to cover the
globe and have placed large orders from both Boeing and Airbus. The most popular plane ordered
by the region is Airbus's A330 representing 13% of total orders placed from 1980 to 2005. This is
closely followed by Boeing's 737 with 11% of the total. (zawya.com 2006) Besides the conventional
H&S carriers, low–cost carriers (LCC) were recently introduced in the region. In 2003, Air Arabia
was established in the U.A.E. introducing the first LCC in the region. LCCs are airline companies
typically of one service class dedicated to providing the best service at the lowest price possible.
Also known as the no–frills airlines, these carriers mainly serve short–haul routes and have high
aircraft utilization rates. Currently there are two additional airlines within this class, Al Jazeera from
Kuwait and the newly established Sama Airlines from Saudi Arabia. However, more of such airlines
are expected to appear as regional traffic increases.
3. Industry Analysis
Porter's 5 Forces Model
To understand and analyze an industry's structure Michael Porter developed a model portraying
every industry to be influenced by five different forces (Jobber 2004). According to Porter, these
five forces are the threat of entry, the power of buyers, the power of suppliers, the threat of

substitutes, and the competitive rivalry.
I. The Threat of Entry
The airline

The Business Model Conceived By Ceo Michael O ' Leary
Introduction
Ryanair has long been the pioneer for low–cost commercial air travel. The business model
conceived by CEO Michael O'Leary affords the company much in the ways of agility and long–term
adaptability. With the economic recovery of the European Union, new threats arise to challenge
Ryanair such as an emerging budget air carrier market, fluctuating fuel prices, and controversial
customer relations. Examined in this paper will be the internal cost accounting factors that affect the
firm as well as an analysis of Ryanair's Strengths, Weaknesses, Opportunities, and Environmental
Threats (SWOT). Through all of this many opportunities arise in the way of route expansion and
capitalizing on existing revenue. To understand the ... Show more content on Helpwriting.net ...
Many air carriers were denied use of the air space in another country simply due to nations holding a
strong opposition to commercial air competition. In 1986, Ryanair obtained permission to service
the airline's second route running from Dublin, Ireland to London–Luton and compete directly with
British Airways. This permission was given by each host nation that had begun a progressive
movement towards the liberalization of air travel between European Union (EU) nation states.
From 1987 to 1990 Ryanair opened an additional 17 Routes and begins to emulate jet travel into the
route structure. However, during this period Ryan air continued to emulate the standard business
model due to continued fare regulation as well as a lack of innovation. Deregulation of air travel
with European Union members had not yet taken full effect, and thus led to continued high
operating costs and losses for Ryanair. Ryanair eliminated the frequent flyers program as well as no
longer offering business class which caused a continued increase in passenger traffic but still had the
airline operating at a loss. In 1987, Michael O'Leary was hired by Tony Ryan as a tax and personal
finance director. O'Leary was soon tasked with aiding in the restructuring of Ryanair in an effort to
return the airline's profitability. O'Leary is a believer of a low fare

Southwest Airlines : The World 's Largest ' Low Cost ' Air...
Southwest Airlines (SWA) is the world's largest 'low–cost' air carrier that is headquartered in Dallas,
Texas, and operates more than 3,400 domestic flights on a daily basis. The company provides
scheduled airline service to 42 states and Puerto Rico, carrying the most domestic passengers of an
airline based in the United States [9]. Founded in 1967, and commencing operations in 1971,
Southwest Airlines has always had a unique and breakthrough business model which has allowed
the airline to maintain its loyal customer base and profitability [2]. Over the years, Southwest has
maintained one of the best customer service records, and its safety record is unmatched in the
industry [9]. Overall, Southwest Airlines performance has remained very stable and favorable over
the years. In the third quarter of 2013, Southwest earned (net income) $259 million and expects
these figures to be even high for fourth quarter, as the airline is anticipating a huge influx of holiday
travelers [5]. While maintaining such a high level of profitability, Southwest was also ranked 2nd in
customer satisfaction for 2013 by the ACSI (American Customer Satisfaction Index), shadowing
only rival low–cost carrier JetBlue. Now you may ask, "how does an airline remain at such a high
level of profitability all while maintaining such a high level of customer service in the post–
deregulation era airline industry?" There's only one reason why Southwest has been able to make it
out consistently on (or near) the

Porters Five Forces Model & the Airline Industry
Porters Five Forces Model & the Airline Industry
Robert Warren
6/11/2011
Abstract Having conducted research on Porter's Five Forces Model and the current business climate
of the airline industry, I will be analyzing the industry using the Five Forces Model. Porter's Five
Forces model is a highly recognized framework for the analysis of business strategy. Five forces are
derived from the model that attempts to determine the competitive intensity, competitive
environment and overall attractiveness of an industry. The framework is based on five forces that
describes the attributes of an attractive industry and suggests when opportunities will be the greatest
and threats the least within an industry. The five forces include ... Show more content on
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For example, Boeing and Airbus supply most commercial aircraft. The concentration within the
suppliers segment of the industry makes it very difficult for competitors to exercise leverage over
another supplier and obtain lower prices. The power of the supplier is one key in prohibiting the
ability of competitors to earn higher profits. According to my research the power of buyers is
medium to increasing within the airline industry. Over the last few years, buyers have been
presented more choices when choosing an airline carrier. The internet has created a structure of
easier pricing information and allows the buyer to more easily compare pricing. Buyers can
sometimes find pricing discrepancies on the exact flight due to less fragmented pricing information
at the buyers fingertips. The internet and it's ability to compare prices has also allowed the
emergence of a few budget airlines to be profitable. Much of the bargaining power of the power can
still depend on where the flier is traveling. The "hub" system, mentioned earlier still allows the
larger airlines to dominate certain cities and creates an environment of higher prices in that market.
For example, a flight from Nashville to Santo Domingo, DR presents the flier with very low
bargaining power. Unless the flier wants to fly through NYC or Newark, NJ, he/she must fly
American Airlines via Miami. The price for this flight is typically very high due to no other airlines

Delta Air Lines (a): the Low-Cost Carrier Threat
Delta Air Lines (A): The Low–Cost Carrier Threat
Problem: Delta Airlines didn't have a comprehensive response to low–cost carriers across functions.
Option: Delta should launch its own low–cost carrier.
Problems: Nearly all major airlines had done this unsuccessfully, proved unsustainable over time,
never had a high–cost carrier transformed into a low–cost carrier.
Since deregulation (1978) the average return on investment below cost of capital for the 5 largest
carriers. Due to 9/11 the demand for air travel declined sharply.
Airline's profitability hinged on the fraction of its flown seats occupied by passengers– load factor
Costs measured in cost per available seat mile (CASM) – cost required to fly one seat one mile
... Show more content on Helpwriting.net ...
JetBlue
Low CASM, high load factor
Humanity, good amenities (in–flight entertainment system)
Low costs: simple fare structure
New technology: Internet (60% of seats were booked on–line), paperless operation, computerized,
Reservation operation (not using call center)
Strong brand: "Cheap chic" image
Employees are all nonunion, high "esprit de corps", flexible employee package,
2. Why have all of the low–cost subsidiaries of full–service airlines, including Delta Express, failed?
The main reason for the low–cost subsidiaries' failure is the airlines' corporate strategy. By
launching a LCC as a unit inside the same corporate structure (e.g., single scheduling and pricing
centre for United Airlines' and Shuttle's low–cost flights), traditional airlines limited the LCC's
flexibility and independence. By building a low–cost carrier on top of a traditional carrier cost–
structure, the parent company was also tempted to think low–cost when setting ticket prices, but not
trying (or being able) to reduce traditionally high costs: the airline had now two unsustainable
business models instead of one!
Secondly, such a strategy requires an extremely complex cultural change. Airlines are traditionally

Porter's Five Forces Analysis Of Ryanair
"A company can outperform rivals only if it can establish a difference that it can preserve."(Michael
E. Porter).
Founded in 1985, Irish Company Ryanair was first created as an alternative towards Aer Lingus who
was operating as a monopolistic company on the market. Operating as a full–service carrier with
two classes of seating, company achieved big passenger volumes but despite its growth by the
beginning of 1990 Ryanair was one step away from bankruptcy. Immediate changes in business
leading strategy were essential, so company has gone through total operations management
transformation. Ryanair extended its services towards rest of the EU, becoming Europe's first low–
fares, no frills airline and the leading airline in the world in terms ... Show more content on
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Ryanair could take the advantage of the internet to enhance revenue through ancillary services. On
the other hand, Ryanair's biggest threat is economic recovery and fuel prices.
1.1.2. Porter's Five Forces
As expressed by Johnson an industry is a group of firms producing products and services that are
essentially the same (Johnson et al, 2011). In addition Porter's five forces framework helps
understand the attractiveness of industries in terms of five competitive forces: the threat of entry, the
threat of substitution, the power of buyers, the power of suppliers and the rivalry between
competitors.
Threat of new entrants relates to the extent of ease associated with entering into an industry and
competing with current market players (Volberda et al, 2011). In the Low Cost Carriers (LCCs) the
threat of new entrants is low due to the substantial entry obstacles linked with entering the airline
industry that include massive capital investment, economies of scale, access to supply and
distribution channels, and legal requirements. However, a big threat can emerge in the near future as
Full Service Carriers (FSCs) have shown interest in joining the LCC

British Airways And Ryanair And The Airline Industry
Introduction
In today's business world, Aviation industry is frequently developing rapidly in order to compete
among each other and survive in the larger markets leading to aggregate competition between low
cost/no frills carriers –LCC and the more traditional full service carriers–FSC (Hunter: 2006). Due
to rapid development, consumer trend tend to improve in the market because flying on mainstream
carriers was no longer cost–effective, therefore, low cost carrier was introduced (Whitelegg: 2005).
Subsequently, operation strategy is fundamental to the success of the businesses. Slack, Brandon–
Jones and Johnston (2013) defined operation strategy as " The pattern of strategic decisions and
actions, which set the role, objectives and ... Show more content on Helpwriting.net ...
Ryanair incorporated at no–frills, low–cost, quick to reach consumers destinations in a much
modernized aviation industry. For instance, it is more cheaply, and more reliable, than any other
airline including British Airways. They do not compromise on safety, top–drawer punctuality, near
perfect baggage handling and efficient 'green' policy. The target markets of this particular airline are
those who compromises on comfort and fare conscious customers. For example: Students, low–
income earners, busy businessmen, and family (Ryanair.com). On the other hand, British Airways
strategy is to become the world's leading global premium airline by making cost that is base more
efficiently and focus on outstanding customer service, which is a critical part of their strategy. The 5
strategy goals are to be the airline of choice for long haul premium customers, deliver and
outstanding service for customers at every touch point, grow their presence in key global cities,
build on the leading position in London and meet customers' needs and improve margins through
new revenue streams (British Airways PLC .com). The target market of British Airways is leisure
travellers, consumers who want comfort and cost is not an issue (marketingmagazine.co.uk). Both
aviation companies are customers based but they do differ from each other in their operation
strategy.
Business models
Business models such as strategy, network, fleet,

Swot Analysis Of Southwest Airlines
There are a variety of tactics and strategies Southwest uses in order to compete with the rest of the
airline industry. One of the most significant and most effective strategies Southwest uses is their no
extra bag fees. This is part of their slogan and also differentiates it from most of the competition.
While Southwest only uses one type of aircraft, other airlines are increasing capacity and are
experiencing higher revenue growth.
D. Who are the high and low performers in the industry? Why?
The current high performers include Delta, American, and Southwest perhaps because increased
labor costs are behind them and they have the most exposure to stronger domestic yields.
E. What are the competitive dynamics between and within groups?
Pricing is the main competitive dynamic between competing airlines. The industry is constantly
striving for the lowest possible prices, while also trying to fit the most passengers per flight. There is
a trend in creating minimal featured tickets in order to drive prices lower. Some tactics are providing
no carry on bags as well as no inflight amenities. Airlines are competing for the key demographic
which does not care about the experience but just the destination.
IV. The Future of the Industry Ashley
A. Given your industry and intra–industry analysis, what do you think the future holds for the
industry? What do you predict will be future trends in industry performance?
Now that most airline travel is on budget carriers, we

Benefits Of A Large Global Market Consists Of Malaysia...
Malaysia Airlines is a world–renowned flag carrier that commenced operation in 1972. The airline
serves as a symbol of national pride after the formation of Malaysia in 1963, and continues to
operate to this day. Following the tumultuous events in recent times, the government carrier has
tragically suffered two fatal blows to their brand reputation. Arbitrary missing flights as well as
missile shootings forced the company to rethink its strategies.
Strengths – Appealing to a large global market consists of Malaysia Airlines' many strengths.
Operating to and from numerous routes via its home base in Kuala Lumpur, its multi–cabin fleet of
144 aircraft has boarded roughly 140,000 passengers in 2014 alone; and as such aspires to be a
world ... Show more content on Helpwriting.net ...
Prior to the mishaps, the contrasting blue–red coloured moon kite, represented "grace in motion but
also thrust and dynamism" and is still internationally recognised today. Relative to its branding
image, Cabin crew that work for Malaysia Airlines are required to display a hospitable and
courteous representation of Malay culture, and show this through their daily duties on and off
schedule. "Learning how to walk elegantly is just a small component of a training regime that takes
in areas such as flight safety procedures, emergency response, food service, grooming and even
social etiquette." (Platt, 2009) Training durations continue for several months to ensure the comfort,
pleasure, and most importantly the safety of all passengers. Malaysia Airlines' importance in the
Asian Market also plays a role in the airlines strengths.
The airline has a greater regional seat capacity than competing airlines such as Thai airways,
Vietnam and Garuda. In fact, of the 15 of the 16 destinations added to the One world network by
Malaysia Airlines, are in the Malaysia region.
Weaknesses – As of the 8th of March 2014, none other than the ill–reputed MH370 aircraft had lost
contact with air traffic control in the radius of Vietnam and Malaysia. Seldom has there been such an
event as large scale as this. A total of 239 passengers and crew has "vanished" off the coast of
Thailand. As a

Frontier Airlines
FRONTIER AIRLINES Frontier Airlines is currently an ultra–low cost carrier headquartered in the
United States. It has not always been that way, but we will discuss more about that a little later. As
the reader, you may be wondering, "What is an ultra–low cost carrier and how is it different than
any other carrier?" so I'll begin by answering that question. After that I will then proceed with more
in–depth information about Frontier Airline's history, operations, finances, labor, and fleet. In
contrast to legacy carriers like United Airlines, Delta Airlines, or American Airlines, which
traditionally provided full service to their consumers, the low–cost carrier (LLC) is considered a
budget airline. Full service airlines included advanced ... Show more content on Helpwriting.net ...
This was partly due to the fact that they had recently purchased Central Airlines of Texas (Lankins,
n.d.). It didn't take long for problems to arise, though. Almost 15 years later, in 1980, pressure from
other airlines caused management of Frontier airlines to request that their own employees forfeit or
reduce items of value, like pay, benefit in order for the airline to stay competitive (Lankins, n.d.).
These cuts are called concessions. These concessions spelled the beginning of the end, because they
were not enough to help the airline recover and in 1985 they were sold to a low–cost carrier named
People Express. The doors closed and Frontier Airlines ceased to exist (Fortney, n.d.). The following
year, in 1986 Continental airlines purchased the newly merged People Express (Lankins, n.d.). Let's
fast forward to 1993, as Continental Airlines scaled back its Denver hub operations. (Fortney, n.d.)
Former executives of the first Frontier Airlines saw this as a high potential moment for strategic
advantage and began to develop a business plan. By July 1994, like a phoenix rising from the ashes,
Frontier Airline was restored. They began operations with two planes previously used by
Continental. By 2001, the airline was being featured in Fortune magazine's list of fastest–growing
companies. (Fortney,

Airline 's Total Revenue Growth Essay
A. Total Revenue growth
Figure 2 Lufthansa's Total Revenue Comparing with Its Major Competitors
Source: Amadeus
In 2010, Lufthansa saw a 20 percent growth in revenue. This indicates that it had recovered from the
financial crisis. However, the next two years the growth rate slowed down, mainly due to the soaring
price of fuel. Sales growth in 2013 declined slightly by 0.4 percent despite Lufthansa's all business
segments made a profit. The reason is that the company launched a restructuring program so that
there were lots of one–way renewal expenses (Lufthansa Group, 2013). In the following year,
Lufthansa was surrounded by intense competition and internal strikes, thus the sales staggered.
Lufthansa had the highest growth rate in 2010 but the rate keep declining over the period shown.
Thus in 2016 Lufthansa lagged behind its competitors, with a sales growth only better than Air
France. The SCORE and 7 to 1 strategy implemented in 2012 and 2014 seem to improve the
company's performance but still not enough to catch its competitor's pace.
B. EBITDA margin
Figure 3 Lufthansa's EBITDA Margin Comparing with Its Major Competitors
Source: Capital IQ
The four airlines' EBITDA margin fluctuates from 2010 to 2016 but overall they all have higher
profitability than past years. In comparison with its major competitors, Lufthansa have a more
flattening curve. In 2016, Lufthansa's EBITDA was the third place out of the four companies. As a
big company with solid financial

The Air Transportation Stabilization Board
The terrorist attacks on September 11, 2001 shook the United States in a profound way, deeply
upsetting the national perception of safety within U.S. borders. No industry or sector of the economy
felt the impacts of these events more than the airline industry. Both the immediate reaction to the
attacks and the long–term repercussions have negatively affected the industry. Today's airline
industry is much different than it was prior to September 11. There is a much smaller work force,
more low–cost carriers, more security and more fees associated with flying. Directly after the
terrorist attacks, the government closed airports, canceling thousands of flights at a direct cost to
airlines. Passenger travel fell drastically due to our air space being closed temporarily, but the main
reason was the loss of consumer confidence. Airlines experienced roughly a 30% reduction in
consumer demand immediately following the attacks. The Air Transportation Stabilization Board
was created in the weeks following the attacks. The board was authorized to give faltering airlines
up to $10 billion in government backed loans. Despite this government funded measure, several
prominent airlines declared bankruptcy. At the same time that the industry was facing this large–
scale drop in the number of passengers, low–cost carriers grew significantly and air fares decreased.
As a result of the massive financial losses due to lack of passenger demand, canceled flights and
increased expenditures for

The Success Of Delta Team
Constant innovation is the key to Delta's success. Delta realizes they compete in an industry where
profit margins are small and the end product is essentially the same. Because of this, they believe
that constant innovation and improvements to operations is the key for success. Delta has built a
business around characteristic that other airlines don't offer and have capitalized on the areas where
other airlines need improvements. As they move forward, they will continue to bring innovative
thinking to their operations as this model has proven successful in all areas of their business. Every
day the Delta team works with determination to apply innovative thinking throughout their
organization (Anderson, 2015). Innovative thinking leads to strong financial performance and has
put Delta on a track to outperform their competition. Delta's long term financial goals are as follows:
Operating Margin – 11–14% EPS Growth – Annual EPS growth of 10%–15% after 2014 ROIC –
15–18% return on invested capital Cash Flow – $6 billion annual operating cash flow and $3 billion
free cash flow Balance Sheet – $5 billion adjusted net debt by 2016 and pension at 80% funded
status by 2020 (Delta Airlines) Capabilities Strengths Delta's unique ability to innovate leads to
great profits. High labor costs and record–breaking jet fuel prices were factors in Delta's bankruptcy
filing, which, at the time, had $20.5 billion in debt, $10 billion of that accumulated since January

Southwest Airlines And The World Largest Low Cost Carrier
Southwest Airlines is one of the United States major airlines and the world largest low–cost carrier.
According to the U.S. Department of Transportation, Southwest Airlines is the United States' largest
carrier in terms of originating domestic passengers boarded.
Financial Ratio Analysis The decreasing of current ratio from 0.785:1 to 0.744:1 from 2013 to 2014
suggests that Southwest Airlines' short term debt paying ability also decreases. This is not a good
sign because it implies that either decreasing in current assets or increasing in current liabilities, and
it was both in Southwest's case. Moreover, since the ratios are both less than one, it suggests that
Southwest Airlines has more current liabilities than current assets. The ... Show more content on
Helpwriting.net ...
Both asset turnover and return on assets denote positive use and increase of assets. The surge from
93.39% to 141% of return on common stockholders' equity signifies the positive profit of investors.
A similar jump also happens to the earnings per share ratio as the net income increases. Because of
Southwest Airlines' good performance during the year, its market price skyrocketed and caused an
increase in the price–earnings ratio. Since the differences of EPS, P–E, and return on common
stockholders' equity are fairly high, the company is generating profit, and they will be attracting new
investors. The rise in payout ratio resulted from higher dividends on common stock is appealing to
investors. The solvency ratios indicate Southwest Airlines' ability to survive over a long period of
time and present Southwest Airlines in a more promising manner through the improvement of the
company's ability to interests as they are due can be seen through the growth of times interest earned
from 10.2 times to 14.97 times between 2013 and 2014 respectively. However, the percentage of
total assets provided by creditors also raises as the debt to asset ratio progresses from 62.07% to
66.46%, and it is not necessarily a good achievement since, after all, they are liabilities.
Recent Company News Southwest Airlines has been in the spotlight for a few events in the past
month or so. Recently, the company has announced ten domestic new non–stop routes for 2016.

Jetblue Case Study
JetBlue and Song: Competitive Rivalry between Low–Cost Carriers
Case Analysis 2
Kathleen Quicho
Prof. Rosalinda B. Lacerona
Faculty, MGE 11A
Time Context
2013 (Present)
JetBlue is a United States domestic airline company who operates on a low–cost principle which
translates into cheaper airfares to its customers. In February 2007 JetBlue underwent a particular
event that could have been its last. Since its beginning in 1998 JetBlue became the 11th largest
company in the industry within six years. Aside from Southwest airlines, JetBlue was the only
company who had been able to keep its books positive while the United States had undergone a
terrorist attack and all other companies were reporting loses.
Song airline was ... Show more content on Helpwriting.net ...
* PASSION: Strive to meet the diverse needs of Crewmembers and Customers; Champion team
spirit; Crave and deliver superior performance; Enjoy overcoming barriers to good service; Look for
innovative solutions to business issues.
I. Statement of Objective * To be able to distinguish each of the two company's competitive edge
against each other * To be able to know the different strategies on how to survive in the competitive
business world over rival companies. * To be able to know competitive actions occurring between
competitors without incurring much cost and sacrificing its profit.
II. Central Problem
How would the company continuously improve their services to be able to maintain its edge against
their rivalries?
How would the business immediately respond to the needs of their customers without sacrificing its

profit?
III. Areas of Consideration
SWOT Analysis – Jetblue
Strengths 1. Functional Structure: Low Cost Carrier with a board and multiple departments. 2. The
company's combination of low fares compared to other airlines and superior customer services. 3.
New York–based JetBlue Airways has created a new airline category based on value, service and
style. 4. High

Competitive Strategy for Low Cost Airlines
Proceedings of the 13th Asia Pacific Management Conference, Melbourne, Australia, 2007, 431–
436
Competitive Strategy for Low Cost Airlines
Hongwei Jiang
RMIT University, Australia
Abstract The aim of this paper is to identify challenge faced to Low–Cost Carriers (LCCs) or Low–
Cost Airlines and provide new insights into the development and competitive strategy for LCCs.
LCCs are still a relatively new phenomenon in Australia since Virgin Blue and Jetstar came to the
market. There are over 30 LCCs have been launched since 2002 worldwide. In fact, LCCs have been
very successful in the USA and Europe since 1990s. For example, in 1994 less than 3 million
passengers flew on LCCs. In 1999, five years later, this figure had risen to about 17.5 ... Show more
content on Helpwriting.net ...
Today, Southwest Airlines operates more than 3,100 daily flights to 62 cities across the United
States, and registers yearly more than 80 million passengers. What began as a small Texas airline,
Southwest now has grown to become one of the largest airlines in the United States1. European
history of low–cost airlines is much younger, but those airlines are for sure trendsetters of the 1990s.
The expansion of LCCs in Europe coincided with the final deregulation of the market during the
1990s. Genuine lowcost operations began in Great Britain in the 1990s with the Irish company
Ryanair (founded in 1985 and started operating flights in 1986), which was patterned on American
Southwest Airlines. Following Great Britain, LCCs have successfully developed on the Continent
(Grotte, 2005). In the year 2005, there are 60 low–cost airlines operating in Europe2. Prior to 2002,
there were no significant low cost scheduled carriers operating in the Asia Pacific rim. The initial
slow development was in part due to the perception that the low cost model adopted in the United
States and Europe could not be replicated in Asia, because of the longer aircraft stage lengths, lack
of secondary airports and regulatory restrictions preventing access to international markets. The
latter being particularly relevant given

Porter's Five Forces Analysis For Aviation And Airline...
Porter's Five Forces analysis for Aviation / Airline Industry
The service provided by airline industry is one of a kind, providing distinguished service to its
customers. It is a mode of transportation and provides efficient services, with luxury and speed
which can't be replaced by any other industry. We need Porter's Five Forces analysis to understand
this industry as the airline industry is plagued by problems such as varying number of customers,
increasing fuel prices, and huge costs clubbed with the ever increasing competition from low cost
carriers which provide services for peanuts. Airline industry has a vast expanse of coverage as far as
its global reach goes. Porter's Five Force analysis would also help us delve into reasons for the ...
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Jet Airways
It had huge debts and small planes of 70–80 seats of multiple categories and thus it increased its
capacity slowly. (Source of information on categories of fleets and aircrafts: www.jetairways.com)
2. Spice Jet
It is concentrated mainly in Tier–II and Tier–III cities. This positioning reduces direct competition
with bigger players and increases cost efficiency. This is a also good strategy because these cities are
growing at a faster and a higher rate than metros
3. Air India
It managed to gain passengers at a tough time when Kingfisher couldn't perform its services as a full
carrier service airline whose traffic migrated to Air India which is country's oldest airline which a
trusted brand name. This gave profits to the sinking airline

Low-Cost Carriers vs Full-Service Airlines
Research was conducted to understand passengers' views and attitudes towards Low–Cost Carriers
and Full–Service airlines. The research was focused on a group of passengers with one crowd using
a Low–Cost Carrier and the other using a Full–service airline. The airlines that will be used in the
research are Aer Lingus and Ryanair running in a fully developed European market, and Malaysia
Airlines and Air Asia currently functioning on a recent developing domestic market in Asia. After
conducting the survey, results show that the younger people are more likely to use Low–Cost service
carriers with Ryanair accounting for 24% and Air Asia with 47% who all belong in the age group of
under 25 years. 87% of the age group were travelling to visit ... Show more content on
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During 2002, Ryanair would charge its one–way fares at about 50 Euros. The Pricing approach
adopted by Ryanair more commonly termed the 'Ryanair effect' had become a popular marketing
strategy worldwide. Part of the Ryanair's strategy for increasing market demand is the distributing of
free tickets. In the first few months of 2003, Ryanair had distributed 100,000 free seats as a way to
celebrate its opening of its new outlet at Bergamo. As a result, Ryanair received 90million
passengers in 2004 and consequently offered 900,000 seats at 90 pence. Researchers have
accumulated that within 5 years time, Ryanair would plan on giving away 50% of its flight tickets
for free. Accordingly passengers' perception of LCCs will thus expect lower fares from Low–Cost
Carriers, especially from Ryanair. Research was drawn to asses the cross–price elasticity of demand
between Low–Cost Carriers and full–Service Carriers. The aim was to figure out the behavioural
patterns of passengers if they are willing to switch from Low–Cost Carriers to traditional airlines if
fare levels reduced significantly. Results show that If Full–Service airlines reduced their fares by
30%, then 45% of Ryanair's passengers and 39% of Air Asia's passengers would be willing to switch
airlines. Even if Low–Cost Carriers in Asia was just relatively a new phenomenon, they have
already adopted strong low fare

Delta and The Future of The Airline Industry Essay
IV. The Future of the Airline Industry
The Airline Industry is in an interesting situation. Simply adding a low cost alternative is not enough
in the industry. The Internet has made the power of buyers grow with the transparency of ticket
prices. This is not something that will change any time soon. Because of this profitability is
predominately reserved for low–cost yet distinctive carriers. No consumer wants to ride what they
consider a "lesser" airline. Airlines need a way to distinguish themselves from one another while
also acknowledging the increased power of buyers. The future of the industry is in JetBlue's "cheap
chic" style. Airlines need to maintain a cost effective price point while also not appearing cheap.
Small ... Show more content on Helpwriting.net ...
Through similar mergers in the 1980s and 1990s, Delta extended its reach into trans–continental and
international markets (Rivkin 7–8). According to its stated position today,
"Delta Air Lines serves more than 160 million customers each year. With an industry–leading global
network, Delta and the Delta Connection carriers offer service to 356 destinations in 65 countries on
six continents." (Delta.com).
The result of this objective is the third largest commercial carrier in the world, having a strong
presence in major hubs such as Atlanta, Dallas, Cincinnati, and Salt Lake City (Rivkin 8).
As with all airlines, Delta's recent performance has been significantly impacted by industry shifts
and external events. Terrorist attacks and escalating costs have significantly impacted Delta's
profitability in recent history (Rivkin 4). The company has also been losing valuable market share to
the low–cost carrier Southwest Airlines throughout the southeast and specifically in the lucrative
Florida market (Rivkin 8). JetBlue also began encroaching on key Delta routes, and this seems only
likely to increase (Rivkin 9). Despite this, Delta has still performed better than any other legacy
carrier (Rivkin 8). Still, recent history has brought several changes to this legacy carrier, and the
company has turned its attention towards new competitive strategies.
II. Analysis of Delta's Competitive Strategy and Position
In recent

Jetblue Essay
JetBlue
JetBlue was merged in August of 1998. It is an American low–cost carrier and is the 6th largest
airline in the United States. The corporation is head quartered in the Long Island City community of
the New York City region of Queens. Its main stream is at John F. Kennedy International Airport.
JetBlue transports services across the United States, the Caribbean and Latin America.
Next, with JetBlue being a low–cost carrier, they are currently working on growth plans to help
bring in more revenue. They face competition because other airlines are corporated with large
corporations and major legacy carriers. JetBlue needs a massive network. If JetBlue can't increase in
size, it could lose market share while others keep increasing. JetBlue, knew that in order to keep up
with other carriers, they had to escalate the number of commercial airline partnerships. The increase
has led to more money revenue. Also, airport deliveries played a major role with problems that they
were facing. JetBlue has not been around, as long as South West Airlines, American Airlines,
United, and Delta Air Lines. That means that since they haven't been around as long, they have to
commit their time to trademark their name out and keep up positive feedback. For other aircrafts, it
may be considered "older" aircrafts, but JetBlue had needed to brand out more aircrafts. If they did
make too many planes and they were not used, it would cause them to either sell, park, or lease to
other airlines.

Analysis of Bulgaria Air and the Eastern-European Airline...
International Strategic Management
1. Legislation and regulatory rules in the industry
Bilateral air service agreements remain the primary vehicles for liberalizing international air
transport services. In the past 15 years more than 157 "open skies" agreements have been concluded
between 96 states, the US being one of the states in 82 of the cases.
Along with the continuing liberalization of air transport regulation, the protection and improvement
of airline passenger rights has gained greater importance, particularly but not exclusively in major
markets. A significant number of States, in recent years, have adopted regulatory measures that
address some of the issues such as denied boarding ... Show more content on Helpwriting.net ...
Hand baggage (including personal items)
The carrier is liable if it was responsible for the damage.
Make sure to file your claim within 7 days of receiving your luggage (or 21 days if your luggage
was delayed).
If you wish to pursue other legal action, you must do so within 2 years of the date your luggage
arrives.
If you are travelling with expensive items, you might be able – for a fee – to obtain a compensation
limit higher than €1,223 by making a special advance declaration to the airline – at the latest when
you check in. Though, the best thing is really to take out private travel insurance.
14 Nov 2013 – Eu approved usage of consumer electronics during take–off, landing and above
3000. The European Aviation Safety Agency (Easa) has approved the use of electronic devices
during take–off and landing and will publish its guidance regarding safety testing and which devices
can and can 't be used during all phases of flight by the end of November 2013.
The approval follows Federal Aviation Administration's ruling in October that personal electronic
devices such as e–book readers, tablet computers and portable games consoles could be used
"during all phases of flight". Mobile phones will also be allowed, as long as their cellular radios are
disabled or they are put into "airplane mode".
Larger electronic devices, such as laptop computers, will need to be stowed during taxiing, take–off
and landing due

Airline Industry Analysis 3
[pic]
The World Airline Industry
A European Perspective
(Case Study)
MCS–M–160
International Strategy
Student Name: Siyuan Li
Student ID: 2800712
Unit Coordinator: Robin John
Question 1
Through PESTEL analysis, identify the major external environmental drives influencing the airline
industry. Since the end of the case (2003), to what extent have these driving force changed?
Question 4
Analysis the business model of the low cost airline, discuss their competitive strategies, and their
future prospect in the Europe airline industry?
Contents
Introduction..................................................4
PESTEL Analysis...........................................5
Future Development on
Airline Industry ............................................8 ... Show more content on Helpwriting.net ...
People were afraid of flying, which led to a decline in passenger traffic.
Terrorists
The world airline industry was severely shaken by the terrorist events of 11th September 2001, and

this is directly result in a catastrophic fall in personal air travel. After that, the security level was
increased at all the airport, that result in high cost put into airline industry, due to more personnel
and further expensive security applications. More security leads to increase waiting times, makes air
transportation less attractive.
Economical
Economical can be another major factor for the airline industry. Airlines ' profitability is closely tied
to world economic growth and international trade. Due to the rate of war and terrorist event, the
growth rate of economy dramatic slowdown, capacity in Europe outstrips demand, which gains the
low yield to the airline industry. The airline industry is now faced with significant capacity overhang
and high cost platform, especially in the US. The report shows that, two major airlines American
Airline and United airline losses of more than US$ 3billion for 2002, which makes world airlines
get struggle.
Moreover, oil prices increasing also affecting their profits. The price of fuel increasing which lead to
the more money will put into ticket. Therefore the passenger demand will decrease. In recent,
especially for the

Five Advantage: A Comparison Of Low Cost And Legacy Carriers
Q1. What is the Value Chain?
Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance"
published in 1985 introduce the Value Chain Analysis. His theory explained how an organisation can
use or maximise its competitive position or strength by linking the activities it performs. This theory
assumes that the organisation is more than a random compilation of machinery, people and money. It
also proposes that if these things are arranged into systems and systematic activates, the organisation
will be able to produce a product or provide a service that customers are willing to pay a price.
Porter theory identifies primary activities (inbound logistics, operations, outbound logistics,
marketing /sales and service) which are directly concerned ... Show more content on Helpwriting.net
...
(n.d.). How Should Airlines Structure? A Comparison of Low Cost and Legacy Carriers. Retrieved
March 8, 2015, from
http://www.kellogg.northwestern.edu/faculty/chopra/htm/research/Airline_RESEARCH,7sept06.pdf
Darby, M. (2007, July 15). LIAT Responds to Questions on High Air Fares. Retrieved March 8,
2015, from http://www.liat.com/UserFiles/File/High_Fares.pdf
High fuel cost, maintenance, manpower drive airfare cost up. (2012, December 10). Retrieved
March 8, 2015, from http://curacaochronicle.com/aviation/high–fuel–cost–maintenance–manpower–
drive–airfare–cost–up/
LIAT aims to cut over 150 employees reducing costs by EC$13 million per year | Caribbean360.
(2015, February 15). Retrieved March 8, 2015, from http://www.caribbean360.com/news/liat–aims–
cut–150–employees–reducing–costs–ec13–million–per–year
LIAT to reduce fuel surcharge cost on tickets. (2015, January 10). Retrieved March 8, 2015, from
http://antiguaobserver.com/liat–to–reduce–fuel–surcharge–cost–on–tickets/
LIAT re–introduces fuel surcharge in the wake of high fuel prices. (2011, August 10). Retrieved
March 8, 2015, from

Southwest Airlines : The World's Leading Low Cost Carrier
Southwest Airlines Case Study Southwest Airlines is the world's leading low–cost carrier. This
company is about providing the best, simple, and most efficient customer experience at the lowest
fares in the industry. Southwest's used their great customer service, their low pricing, and their
unbeatable staff to create a new type of airline. Many different companies noticed that Southwest
was taking off. They used a couple different strategies to accomplish this. One of the strategies
Southwest used was utilizing less congested airports. This allowed them to reduce delays and
increase efficiency as well as convenience for customers. Another strategy was using only one type
of plane to reduce maintenance costs and increase standardization. The third strategy was to use a
point–to–point system. This helped reduce turn–around time and customers enjoyed not having to
connect flights. Fourth, they were adamant about creating an unforgettable experience for the
consumer. They hired a staff with great personality and attitude. Finally, they hedged against fuel
costs in order to keep cash flows and profitability stable as prices fluctuated. The airline industry is
becoming extremely saturated and competitive. Fares are getting lower and new airlines are forming
in order to combat the increase in operating costs. In order for Southwest to keep with its
competitors, the company must stop relying on just their low prices and customer service. They
must differentiate themselves for

Southwest Airlines' & Fuel Hedging
A "Hedge" of the Pack:
A Review of Southwest Airlines Innovative Fuel Strategy
While many airlines suffer from rising fuel costs, Southwest Airlines continues to emerge victorious
in the aeronautical landscape. Other carriers now forced to increase prices to compensate for fuel
costs, are now subject to the new mindsets of consumers who are opting for longer bus and car rides,
or simply not traveling at all. The woes of the airlines industry have many posing the question if
airline travel is fast becoming a travel method for the affluent (Stoller, 2008). In the midst of the
situation, Southwest Airlines is able to capitalize on rising costs and maintain its low–price position
because of an innovative fuel acquisition strategy known ... Show more content on Helpwriting.net
...
airline industry has never matched the profitability of even the average U.S. corporation (ATA
Report, 2007). In its ""FAAAerospace Forecast Fiscal Years 2008–2025," the Federal Aviation
Administration (FAA) reported on the industry's 36 mainline air carriers that use large passenger jets
(over 90 seats) and 84 regional carriers that use smaller piston, turboprop, and regional jet aircraft
(up to 90 seats) to provide connecting passengers to the larger carriers (FAA, FAAAerospace
Forecast Fiscal Years 2008–2025, A Review of 2007), stating that "three distinct trends have
occurred over the past several years that have helped shape today's U.S. commercial air carrier
industry: (1) major restructuring and shrinking by the mainline network carriers; (2) rapid growth by
low–cost carriers, particularly in nontraditional long–distance transcontinental markets; and (3)
exceptional growth among regional carriers."
Within the last decade, the industry has fallen on difficult times due to the effects of the September
11, 2001 terrorist attacks, and the extenuating weather circumstances in August 2005, which resulted
in the back–to–back onslaught of Hurricanes Katrina and Rita. The effects of these hurricanes in
addition to implausible losses of life and property, would soon include reduced fuel production in
the gulf, and begin a period of rising fuel costs which affected both consumers and carriers, and now
in 2008, as an OPEC

Airline Business Environment in Asia
Introduction
Singapore Airlines is one of the world 's leading carriers with an advanced fleet and it is
internationally respected as the innovative market leader combining a quality product with excellent
service .Being a international company in the competitive International business environment ,it has
to face a number of competitions ,challenges ,changing environmental trends and options .To deal
with these issues ,SIA pursue a number of management strategies while maintaining it's key
resources and secret of success. This report will analyse the Singapore Airline's corporate strategy
,business environment ,key resources,key success factors and issues facing by the company.
Airline Business environment in Asia–Pacific ... Show more content on Helpwriting.net ...
The growing number of Alliances is one of the major changes in the Southeast Asia Airline
industry.After the Asian currency crisis in 1997,many of the Asian airlines became aware that they
need to change their traditional conservative approach to regional and global
partnership.Therefore,majority of the Asian Airlines tried to be part of the Alliances.Most major
Asian Carriers become part of some alliances. Involvement in these alliances has prompted
efficiencies in other areas ,including cost cutting ,privatisation and route rationalisation which have
helped airlines to reach a satisfactory level of economic performance in a short time. The large
Airlines such as SIA ,Thai Airways become part of the Star Alliance .But SIA took sometime to
enter the Star Alliance because of it's failure to buy News Limited's 50 per cent stake in Ansett
Australia .But eventually,it sign up as the twelfth member of Star Alliance in October 1999 and SIA
was the last major airline in the region to commit to an alliance.(Hill et al,2004)
Key Resources
The success of the company depend on a number of factors .Key resources are one of the important
factors that play in the main part of the company's success .Key resources include tangible resources
such as plant and equipment ,intangible resources such as brand name and organisational
capabilities .Being a successful company ,SIA

Study on the Future of Low Cost Carrier in China
论廉价航空在中国的发展前景专业：国际经济与贸易（双语）学生：蒋鸿泽指导老师：杨
艳摘要：2009年的中国航空市场由于全球性经济危机的肆虐显得异常低迷，特别是民用航空
业在这一年遭受到了毁灭性的打击，国有航空企业只是凭借强大的资本支持而亏损维持运
营，与此形成鲜明对比的是中国的第一家廉价航空公司春秋航空在艰难的经济环境下依然能
保持盈利，在普通航空公司举步维艰的形势下，低成本航空这一国外新型的管理模式给航空
从业人员带来了新的启示，再加上前不久传出的欧洲廉航巨头瑞安（Ryan air）将要进军中
国市场，更是给中国的廉航市场注入了一针强心剂，预示着中国廉航时代的到来。本文主要
就廉航成本管理，国外廉航成功经验，国内制约因素等几个主要方面来阐述引入国外廉价航
空模式在中国市场的前景。关键词：经济危机廉价航空成本控制行业挤压进入壁垒 Study
on the Future of Low Cost Carrier in China Major: International Economics and Trade Student:
JIANG Hongze Supervisor: YANG Yan Abstract: China 's aviation market was extremely low in
2009 because of the ravages of the global economic crisis, especially in civil aviation industry. Even
the state–owned aviation enterprises was not ... Show more content on Helpwriting.net ...
束以及同行业航空公司的挤压和敌视。尽管如此，春秋航空在运行的3年中还是能保持每年
盈利，尽管盈利不大，但是对于不景气的中国航空业来讲，连续3年盈利依然是一个不小的
奇迹。实际上对于廉航来说，中国其实是一个颇具潜力的市场，中国地域广阔，可供飞行条
件的短途航线众多，二线机场的逐渐开辟都为廉航创造了基本的生存条件。此外，中国支线
航空规模很小，航班密度低，成本高，价格无法降低为廉航进入并抢占这一部分市场提供了
有利条件。这也是为什么最近几年亚洲一些廉航甚至包括瑞安（Ryan air）这样的巨头都想
进入中国市场的原因。 21世纪以来，全国民航的价格有大幅度地下降，将通货膨胀的因素计
算在内，2009年的机票实际价格水平要比2001年降低15%左右。表1：2001–2009年国内航线
平均价格水平趋势单位：（元/客一百公里）（数据来源：从统计看民航）从图中，我们可
以看出国内航线的平均价格从2001年到2003年有大幅下降，但是在同阶段的空中旅客运输量
却只有5%左右的增加，这样直接导致了民航业的巨大亏损，据统计，在同一时期的民航业亏
损达到了数百亿元，2003年以后，随着国民经济的迅速发展，机票价格开始回升，旅客量也
在以每年10%的比例大幅增长，到了2007年，又经历了一次降价风潮。目前，中国的国民平
均可支配收入水平不到1000美元，而一张单程经济舱的国内航线机票就能占到国民平均收入
的10%，而发达国家的机票价格只占它们国民平均可支配收入的0.5%。这说明了在中国，航
空运输依然被当作一种高端的消费，无论是国家民航政策还是行业规则都充分地证明了这一
点。而跟欧美国家相比，中国的消费者对低票价的航空服务有着更加强烈的诉求。以上的数
据说明了价格下降的初期，国民对机票价格的敏感性并不高，这是由于机票定价起点太高而

国民可支配收入有限，飞机运输被认为是一种奢侈消费，价格弹性不足。除此之外，以上的
数据也可以表明民航业的繁荣是建立了国民经济大幅度增长的基础上，它们两者之间形成了
一种正比的关系，这也是由于国内的人均可支配收入所决定的，即使航空公司将成本一降再
降，只要可支配收入这个基数太小，人们也还是不愿意选择航空服务的。第三节经济危机
对廉航的影响经济危机的不期而至带来了各行各业的全面萧条，民航业当然也不能独善其
身，根据国际航空运输协会（IATA）的预测，2008年的全球航空运输量会有2%的下跌，从
整体的趋势来看，好像民航业步入了一个新的"寒冬"。但是，另一个国际组织国际民航组织
（ICAO）的数据则显示，从2007年到2008年的全球航空运输量的增长虽然从7.4%跌至
1.3%，但整体仍然呈上升态势，从两张报表的对比我们还是能从两个不同全球航空机构的调
查结果中看出一些端倪，国际航空运输协会的主要成员是老牌的传统航空公司，而国际民航
组织则包括了所有成员国各种类型的航空公司，廉价航空公司也被计算在内。那么统计结果
的区别正好说明了低成本航空公司在经济危机下在全球民航业中扮演了重要的推动角色，反
过来说也是经济危机给廉价航空带来了新的契机。表2：世界国际国内营收性运输总量

JetBlue Airlines Case Analysis
JetBlue Airlines
Strategic Management Case Analysis
Introduction to the Company
History of the Firm JetBlue was established in 1999, and was the third airline start–up for founder
and CEO David Neeleman. Neeleman managed to gather $130 million, the most ever raised for a
start–up airline, from investors that included Chase Capital and financier George Soros. With the
large start–up capital he purchased new Airbus A320 jets equipped with satellite TV, a first in the
industry. In 2004 the company ordered an additional 30 new A320 aircrafts from Airbus. The
airlines first flight was from New York to Fort Lauderdale in 2000. During the year, the airline
added nine more destinations in California, Florida, New York, Utah, and ... Show more content on
Helpwriting.net ...
Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume
routes. These airlines generally form alliances with the major carriers and provide service from their
hubs to smaller cities in the region. Low cost carriers such as Southwest developed after
deregulation in 1978. Southwest pioneered the low cost airline model, which many other airlines
have tried to copy. Although there are currently four low cost major U.S. carriers (JetBlue Airways
2006 Annual Report, n.d.), major competitors according to market share include (Figures 1 and 2;
JetBlue Airways Corporation Overview, n.d.):
AMR Corporation
Southwest Airlines, and
UAL Corporation.
Industry Profitability
Intensity of Rivalry The airline industry can be considered an imperfect oligopoly. There are several
large carriers that dominate long distance flights, and many small carriers that compete for short
distance flights. Competition is fierce, and the return for most carriers is very low. Some airlines are
trying to differentiate themselves, like JetBlue for example, by offering superior services at low
prices. Other low cost airlines, like Southwest, offer low costs with no frills. Most airlines offer a
frequent flyer programs in order to develop brand loyalty. In recent years there has also been several
alliances formed between airlines. These alliances enable

Jetblue: Strategic Alternative And Recommend Strategy
VI. Strategic Alternatives and Recommend Strategy
A. Strategic Alternatives: Internal Factors:
External Factors: Strengths:
1. Decentralized organizational structure and workers are not unionized
2. Automation of specific work to rise in productivity
3.Customer satisfaction.
4. Marketing through divers kinds of media form
5. R&D: new offering of premium class
6. Greater aircraft use– newest fleets.
7. HR focuses to accomplish customer expectations and organizations objectives through culture
oriented service. Weaknesses:
1.Maintenance of older aircrafts.
2. Debts paid because of decline in interest rates.
3. Decline in yield per passenger mile.
4. Rise in carrier's tax.
5. Lower demand amid off–peak season.
Opportunities:
1. Concentrating on latest ... Show more content on Helpwriting.net ...
Recommended Strategies:
The best strategies that can be enforced by JetBlue are the SO strategies, WO strategies & ST
strategies. The strategies might differ based on the business unit needs. Marketing teams should
concentrate on offering holiday bundle or other relevant services & products amid the low demand
period or may also market its latest services & products in order to maintain new and old customers.
Operations should concentrate on enhancing yields & scheduling more flights during the day with a
minimal turn around time per aircraft. Finance must concentrate on buying of latest aircrafts.
The ST strategies & WO strategies will be regarded as a short term strategies, as selling older
aircrafts will support in financially balancing out the organization, or likewise utilized in investing
on latest aircrafts or other services & products. Automation of some workforce will bring awesome
deal raised productivity in the complete operations, thus saving few operational costs which later
can be utilized for operational cost. However Automation can't be intensely relied on upon and
because of few system problems; physical man forces will be

Increasing Competition Between Low Cost Carriers

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